Surge in Usage as Consumers
Seek Discounts during Recession
By Jack Grant
More good news about coupons: The recessionary economy continues to propel redemption.
Valassis, one of the nation’s leading media and marketing services companies, released research conducted by its subsidiary, NCH Marketing Services, that provides new insight into consumer saving habits and manufacturer coupon trends during these tough times.
Consumer packaged goods (CPG) coupon redemption during the fourth quarter of 2008 increased a dramatic 16.7% compared to prior year quarter, although total coupon redemption for 2008 was flat compared to the prior year, according to this annual report on coupon trends.
The report also notes dramatically increased online coupon activity; distinct trend differences between health and beauty care (HBC) and grocery manufacturers; a significant shift toward mass merchandisers, dollar stores and drug store chains; and an overall progressively upward trend in coupon promotional activity in the second half of the year as the economy worsened.
“Challenges in the economy are most definitely influencing manufacturers and consumers as it relates to both distribution and redemption,” said Suzie Brown, Valassis Chief Marketing Officer. “Every trend indicates these current buying and saving habits will continue to increase and value seeking will become a cornerstone of shopping behavior in the future.”
HBC manufacturers saw redemption rate improvements as a result of strategically using coupons during a downturn in the economy to motivate consumer purchases. HBC makers tactically improved the attractiveness of coupons and distributed nearly 5 billion additional coupons in 2008.
Overall, HBC coupons increased their average cents-off savings to $1.75 – more than a
9% increase from the previous year; extended average offer expiration dates to 2.8 months; and substantially reduced their use of multiple purchase coupons. Meanwhile, grocery manufacturers began to reverse their conservative approach to couponing by distributing more coupons in the second half of 2008.
Overall, 281 billion coupons were distributed last year. The free-standing insert (FSI) continued to deliver nearly 90% of all coupons in 2008 with magazines, handouts and the Internet gaining share. Online coupon distribution grew faster than any other medium – up more than 80% – according to this report, although the Internet represents less than 1% of all coupons printed. Likewise, redemption volume of online coupons increased nearly 130% to 4.8% of all CPG coupons redeemed in 2008. Valassis offers online savings through its redplum.com destination site and network.
“These trends tell us that marketers are using the Internet more and more to reach consumers with coupons and consumers, especially in current economic times, are responding at an increasing pace to Internet coupons,” said Charles Brown, NCH Vice President of Marketing. “As the year progressed and consumer demand grew, manufacturers increased the overall number of CPG coupons in the marketplace in the second half of the year and utilized targeted media to a greater extent. We continue to see increased demand for savings and value fueled by the state of the economy and that is particularly evident in the significantly increased redemption in the last three months of the year.”
Other findings include:
- 94% of consumers say they use coupons, up five share points from the previous year; 76% use coupons regularly
- Average face value of CPG coupons offered increased to $1.29 – up nearly 5% from 2007
- Overall, the average coupon expiration of 2.5 months remained flat from the previous year
- Coupon redemption volume is growing by double digits in non-traditional supermarket channels such as mass merchandisers, dollar stores and drug store chains.
Only 20% of consumers are price buyers with the majority of them promotion-sensitive buyers, said Brown, speaking earlier this year at the annual conference of the Association of Coupon Professionals (ACP). “They are looking for the ads and the coupons and what the store is offering from their frequent shopper card program. Consumers want to buy certain brands in a way that fits their budget. They are consciously seeking these deals.”
Over the years, what has been the real impact of a recession on consumers? According to NCH data, 75% of consumers used coupons in the recessionary period of the early 1980s, with the percent of users growing to 86% during the first two recessionary years of the 1990s. Today, the figure is 93%.
“Consumers are very promotion sensitive and very deal oriented today,” said Brown.
Market Watch
GS1 DataBar Deadline Postponed to January 2011
By Jack Grant
To nobody’s surprise, the industry is officially not ready for the GS1 DataBar.
The last and final implementation step of the new barcode on coupons, originally scheduled for January 1, 2010, will be deferred until January 1, 2011, according to the Grocery Manufacturers Association (GMA).
After collecting both quantitative survey data and qualitative feedback from retail and supplier representatives during a public comment period, the Joint Industry Coupon Committee (JICC) affirmed its earlier recommendation that the UPC-A barcode not be replaced with the GS1 DataBar on January 1, 2010. The research revealed that many retailers would not have the necessary equipment and POS software in place to implement the new GS1 Data Bar technology by the original implementation date. Moving back one year to 2011 ensures that the industry has adequate time to prepare for the transition.
The JICC emphasized that the industry should expedite work toward the final implementation and the various benefits that the GS1 DataBar will bring to both retailers and manufacturers. Upon implementation, manufacturers will have the opportunity to develop more robust coupon offers, including coupon values in any amount up to $999.99. Retailers will experience automatic expiration date checking, a reduced need for bypass code, reduced cashier intervention, improved scan rates and increased speed of checkout.
“Despite the deferred implementation position of the committee, the JICC encourages retailers to proceed with implementation of the GS1 DataBar as soon as they are ready and not wait until the 2011 date,” said Stephen Sibert, GMA senior vice president of industry affairs. “Early adoption will help ensure the smoothest transition possible and allow manufacturers and retailers to fulfill our shared mission of serving consumers quickly and efficiently.”
In a related announcement, the National Grocers Association (NGA) supports the decision of the Joint Industry Coupon Committee (JICC), in which N.G.A. is a member, for the deferral of the final implementation step of the GS1 DataBar.
“The fact is the industry is not ready for the implementation of the GS1 DataBar on coupons. Staying with the current schedule would have created a significant hardship for many retailers who are not be equipped to scan the new GS1 DataBar,” said Frank DiPasquale, Executive Vice President of NGA. “With this change in the schedule, clear communications and working with all parties involved, we believe that this will result in a workable time period that is needed to ensure the DataBar is fully functional for the industry.”
TV Ads for Coupons.com
Coupons, Inc. is now advertising its digital coupons via new national television campaign titled, “There’s A Better Way to Save.” The firm’s first TV campaign aims to raise awareness of the money-saving opportunities available with online coupons and drive traffic to the flagship consumer website, Coupons.com.
More than 18 million unique consumers visited Coupons.com in June, making it the 43rd largest Web site in the U.S. In June, over $57 million in savings was printed from Coupons.com, a 130 percent increase over the same month in 2008. In addition, between January 1 and June 13 of this year, $313 million in savings was printed, which is equivalent to the amount of savings printed in all of 2008.
Zavers Launches Digital Network
Manufacturers and advertisers can now instantly measure the effectiveness of their marketing efforts, including which promotions are leading to sales, according to Zavers, the maker of this new digital promotions platform. This innovation digitally closes the loop by measuring an offer from the time it is created by the manufacturer to the moment it is downloaded by the consumer to the actual retail sale. Zavers says that retailers can enhance their customer loyalty programs, and consumers can save money without having to clip or remember to carry paper coupons.
Zavers is the first digital coupon program in the New York metro area. A&P, The Food Emporium, Super Fresh and Waldbaum’s supermarket chains have deployed the Zavers’ digital promotions platform in their locations throughout New York, New Jersey, Pennsylvania, Maryland, Washington, D.C., Connecticut and Delaware. Adopting the platform represents a significant enhancement to their customer loyalty club programs and CRM efforts, Zavers says, and offers members a new, easy way to save on the products they want.
Kroger, Unilever Partner for Digital Coupons
Kroger has forged a partnership with Unilever in which shoppers can browse an online catalog of exclusive coupons and download offers to their loyalty cards. Shoppers must register by providing their name, email, zip code and birth date. They also select a password, and must provide it with their email address each time they wish to browse offers.
Powered by You Technology Brand Services, Unilever’s digital coupon program includes several dozen coupons for health and beauty care and food items. The program is running in Kroger, King Soopers, Fry's, Smith’s, Dillons, JayC and City Market stores. Also using the service is Safeway and its banners: Randall's, Tom Thumb, Carr’s, Vons, Genuardi’s, Dominick’s and Pavilions.
Lowes Foods Offers Private-Label Digital Coupons
Lowes Foods is branching out its “e-Offers” digital coupon program to include more private label products. Powered by InstaSave, a provider of consumer-targeted manufacturer discount promotions and electronic offers, the program includes coupons for national brands and more than a half-dozen private-label items.
E-Offers is a Web-based program that allows customers to download offers to their Lowes Foods Rewards card. Customers can go online and select discount offers before they go shopping. The offers are automatically subtracted from the customer’s next order when the product is purchased.
AUGUST 2009
Separating Fact from Fiction about Digital Promotions
By John Karolefski
What are the different types of digital coupons? Are they more effective than print versions, or less so? How do their metrics work?
Those are the questions that the Market Research Task Force of the Association of Coupon Professionals (ACP) has been wrestling with these days. While the answers continue to evolve, there has been some agreement on the fundamentals of these promotions that are gaining traction as a popular marketing tactic.
“When talking about digital coupons, don’t automatically assume they are like paper or that they are necessarily different,” said Matthew Tilley, director of marketing at Imnar.
Tilley, who heads up the Market Research Task Force for ACP, examined these new coupons in a presentation at the association’s annual conference. The task force has come up with three “profound conclusions,” he said tongue-in-cheek, underscoring the challenge of getting agreement from different parties on digital coupons. They include:
Digital promotions are not paper promotions, but they’re still promotions.
“A digital promotion is not an FSI,” he said. “FSIs accomplish different purposes than a digital promotion and they have different redemption processes. If you bring a piece of paper to the point of sale, there’s a process that is generally accepted for handling those coupons. If you bring me a cell phone or a loyalty card and try to clear that, the process may not be so obvious. Processors have been defined by the ACP, giving clearinghouses and manufacturers’ agents ways to manage those.”
Tilley said there are different audiences and different objectives when comparing the two types of promotions. Even the experience of going to a website and either hitting “print” or downloading offers to a card, or using a mobile phone are very different experiences. But digital coupons are still a promotion.
“But marketers are still using it to encourage trial, encouraging repeat purchase, and to get loyalty,” he said. “You’re ultimately using this discount, this savings opportunity, to deliver a message. It happens to be in a different vehicle and different format, but it essentially does the same thing as paper coupons.”
However, Tilley added, there are important differences because digital promotions allow for a more holistic approach to measuring and analyzing promotions.
“You have the opportunity to see a bigger range of what is possible,” he said, “beyond simply not just how many coupons have been redeemed. Digital promotions allow assessment of the advertising value, the number of people interacting with it, the number of people indicating a desire to purchase, and the number of interested consumes who actually went to the store and purchased.
“So you can start more detailed assessment,” he continued. “You have new and different data points to grab and hold on to. Digital promotions can be a game changer, but they don’t change which game is being played. The goal is still to sell product. You now simply have more ways to do what you’ve been trying to do that.”
All digital promotions are not equal, but they’re more alike than you think.
According to Tilley, all digital promotions involve the Internet. There are three types: Print-at-Home Coupons, Coupons Tied to a Loyalty Card, and Mobile Phone Coupons.
“The Internet is the Internet,” he said. “There are lots of avenues to get there and many access points to a web page. Distinguishing between a cell phone coupon versus a coupon that you download to a card may be a false distinction because ultimately you’re going to the same place. You just use a different device to get there,” he said.
There are five tracking points for any promotion.
The five tracking points as proposed by the ACP Market Research Task Force, for any promotion – digital or otherwise – include:
1. Circulation How many offers are made available in the universe?
2. Impression How many people actually saw the offer?
3. Interaction How many people did something with that offer?
4. Selection How many people chose to clip it, print it, and download it?
5. Redemption How many people took it to the store to redeem it?
“Some digital methods give you insight into all five of these points,” said Tilley. “Some of them, depending on the method, may actually give you more granular information and provide some additional insights. But some of these digital promotions – because they give you all of these points – give some insight into something beyond just what was redeemed. You may start being able to see selection patterns. You may start being able to start testing creative fairly on the fly, doing some things that are not really possible in the off-line world.
“So what are you comparing?” he asked. “It’s important to understand that whenever you’ve got all these metrics, you may have opportunities to create and evaluate new numbers that we hadn’t even thought about before.”
Ultimately, don’t focus too much on redemption, Tilley advised.
“When you focus on redemption rates with non-paper promotions, you may be missing something,” he said. “Redemption does equal a sale, so that’s an important measure to look at. But it is possible to have an effective promotion in which there is little to no redemption. After all, what is a coupon? It is an advertisement, an attempt to move someone into the store with or without a coupon.
“At the end of the day, while marketers like to have the tracking, you just want to move more stuff. You’re not really in the business of redeeming coupons. You are in the business of moving products. And that’s important to remember.”
Market Watch
Most Shoppers Redeem Coupons at Grocery Stores
By Rose Anthony
The grocery store is the epicenter of the American consumer’s coupon activity, according to the latest research from North American targeted marketing leader ICOM, a division of Dallas-based Epsilon Targeting.
The survey found that 86.5% of 1,827 American respondents who used coupons in the last month identified the grocery store as the place of redemption. The grocery far outpaced its closest competitors, which included restaurants at 46.5%, department stores and mass merchants such as Wal-Mart at 41.3%, and drug stores at 34.9%.
Not that long ago some consumers felt stigmatized by coupon usage, according to ICOM. The recession may have changed that. Fully 86.8% of respondents in the survey said they are using the same amount or more coupons than they used a year ago. One out of three said unequivocally they’re using more coupons than a year ago.
“The good news for national brands is that there is, in fact, an opportunity to win back customers who have switched. Some marketers were worried they’ll never return. But the win-back depends on knowing who is switching and why, and responding with targeted incentives based on that strategic information,” said ICOM Marketing Director Warren Storey
In another sign of the times, survey respondents made it clear that customer loyalty rewards supporting basic household purchasing are the most appealing. That means groceries and gasoline. Seventy percent of respondents said they’re interested in getting rewards at the grocery, 60.7% said gasoline. The next closest categories were retail stores at 41.2%, household products at 40.3% and travel at 29.3%.
ICOM’s survey was sent to 70,000 households nationwide. Epsilon Targeting, the new data division of Epsilon, combines the collective resources of Epsilon Data Services, ICOM and Abacus to form the industry’s largest set of data solutions.
Snacks Top Online Coupons
Snacks dominated the Top 10 list of the most popular online coupon categories printed in June, according to Coupons.com, the leading network for digital coupons. Sweet Snacks, Cookies, and Salty Snacks took the No. 4, 5, and 8 spots, respectively.
Yogurt advanced into the Top 10, taking the No. 1 spot, while Ready-to-Eat Cereal took the No. 2 position. Powdered Beverage Mix advanced four places to the No. 3 position, and Coffee moved up to No. 6. Cheese declined from No. 4 to the No. 7 position, and Dessert Items took the No. 9 position. Condiments rounded out the Top 10. The ranking is based on the number of coupon prints by category on Coupons.com and sites across the Coupons.com publisher network in June 2009.
New Board and Awards for ACP
The Association of Coupon Professionals (ACP) has finalized its board of directors and recently distributed achievement awards to members.
The board includes: Dan Abraham, Brand Coupon Network; Jane Michels, Coupons, Inc.; Jackie Broberg, General Mills; Joanne Walk, Hormel Foods Corporation; Val Stark, NCL Graphics; Len Harris, Kellogg Company; Earl Ellsworth, Universal Marketing Services; and John Bigler, Cunningham Electronics.
Board members with a year left on term include: Pam Samaniego, Catalina Marketing Corp.; Dadi Akhavan, E-centives; Mike Sonsthagen, Kimberly-Clark; John Irwin, Promotion Eyes; Ron Fischer, Redemption Processing Reps; Mary Ann Pindulic, Unilever. Debbie Settle of Inmar is a permanent board member.
Len Harris of Kellogg was re-elected president for a two-year term. Mike Sonsthagen, Kimberly Clark was elected vice president for a two-year term. Elected to serve the one-year balance of the treasurer’s position vacated by Sonsthagen was Joanne Walk, Hormel.
Mary Ann Pindulic of Unilever received the ACP’s Lifetime Achievement Award.
Also, Industry Achievement Awards were given to Val Stark, NCL Graphics and
Matthew Tilley, Inmar.
RPR Begins 16th Year of Service
Redemption Processing Representatives (RPR) has begun its 16th year of offering coupon services to the industry. Ron Fischer founded RPR in June 1994 to capitalize on his extensive knowledge and industry experience, first with Lever Bros., as Manager of Promotional Payments/ Deductions, and then as Manager of Coupon Operations and Chair of the Unilever Coupon Committee.
RPR’s service portfolio includes Coupon Deduction Management, Alternative Coupon Processing Solutions, and Coupon Consulting for both manufacturers and retailers. The firm currently provides customer service and support to two retail clearinghouses: Mandlik & Rhodes Information Systems and S.E.A. Enterprises. Both follow recommended industry guidelines, and offer fully auditable data systems.
RPR became a member of the Association of Coupon Professionals (ACP) in 1994. Fischer has chaired several committees and received the ACP Industry Impact Award in 2001. He also served as president from 2003 through 2005, and currently represents the board and chairs the Coupon Guidelines Committee.
